The Checkout: Conagra Reports Q4 Earnings; Flower Foods Invests In Base Culture

Welcome to The Checkout: an express lane for the weekly news you need to know, always 10 items or less.

Conagra Sees Sales Increase As Inflationary Offset Actions Take Effect

Food giant Conagra reported a 6.8% increase in organic net sales during Q4 2022 despite a higher-than expected inflationary environment and volatility in key supply streams within its value chain. The strong growth in Q4 was driven by margin improvement in its Grocery & Snacks and Foodservice segments, the company reported, which saw sales increase 7.2% to $1.2 billion and 21.5% to $287 million, respectively.

“Throughout fiscal 2022 our team took decisive actions to offset inflation and invest in our business,” said President and CEO Sean Connolly, on a call with investors. “I was also pleased to see margin improvement materialize in the fourth quarter in Grocery & Snacks and Foodservice. This represents an important inflection that we expect will extend to our Refrigerated & Frozen and International businesses as fiscal 2023 progresses.”

According to Connolly, the company’s joint venture with grain producer Ardent Mills was a key component as it worked to hedge against inflationary pressures in the wheat market, one of its core supply streams. Within Conagra’s portfolio, new product innovations with plant-based, single-serve and low-sugar attributes also helped drive sales.

Conagra’s full year FY22 net sales rose 3.1% to $11.5 billion while gross profit decreased 10.7% to $2.8 billion. According to the report, despite supply chain productivity, higher organic net sales and decreased pandemic-related expenses in addition to increased sales associated with its Pinnacle Foods acquisition were not enough to offset elevated operating costs, citing full year gross margins decreased 24.6%.

Connolly said the company expects its recent investments to strengthen its supply chain, inflation-driven price increases, new product innovations and margin improvement across its core segments to drive top-line growth throughout the upcoming fiscal year.

Flower Foods Invests Base Culture

Keto bakery brand Base Culture announced it has secured an investment from Flower Foods, parent company to brands like Nature’s Own, Dave’s Killer Bread, Wonder and Canyon Bakehouse, among others. The sum of the investment and terms of the deal were not disclosed.

According to the release, the funding will go toward expanding Base Culture’s distribution, marketing and manufacturing capabilities and support new consumer acquisition. Base Culture founder and CEO Jordan Windschauer believes the partnership will support the brand as it looks to its next phase of growth.

“Flowers shares Base Culture’s values of putting people first, refusing to compromise on quality and taste, and driving action with insights,” said Windschauer, in a press release. “Together, we are committed to reaching more consumers around the country with Base Culture’s cleanly-formulated, high-quality and delicious products. We are eager to partner with Flowers and leverage over a century of industry expertise as we embark on our next phase of growth.”

Windschauer founded the company in 2012 and the company now boasts a portfolio of gluten-free and grain-free products including bread loafs, breakfast bars and baked goods. Base Culture products are currently available in over 15,000 doors nationwide, according to the release

Over the past few years, the baked good giant has ramped up its M&A and investment activity, most recently acquiring Dave’s in 2018. Flower joins Base Culture’s existing investor Emil Capital Partners. Whipstitch Capital served as the financial advisor on this deal.

Amazon Automates Massachusetts Whole Foods With Pilot Dash Cart Launch

A Westford, Massachusetts Whole Foods store will begin piloting the latest version of Amazon’s Dash Cart this month, a fully automated shopping cart designed to eliminate checkout lines and further streamline the in-store shopping experience. The technology was first released in September 2020 with the latest version boasting lighter and weather resistant materials with an improved screen display and longer battery life, among other features.

“As many of our customers return to their in-store grocery shopping routines, it’s exciting to introduce new and unique ways for them to shop our stores,” said Leandro Balbinot, chief technology officer for Whole Foods, in a press release. “We’re thrilled that the newest version of Dash Cart will debut in our Westford store and can’t wait to hear the feedback from our customers there.”

Shoppers can access the technology by scanning a QR code in the Amazon or Whole Foods app. The cart automatically processes payment associated with the shopper’s account and a receipt is sent via email.

The Fresh Market Scraps IPO Plans

Natural products retailer The Fresh Market has abandoned its IPO plans only two months after South American retail giant Cencosud took a majority stake in the business. The company first announced its plans to take the company public for the second time in its 40 year history last summer but has delayed its offering due to the current state of the market.

The retailer has not announced the reason it has withdrawn its plans aside from stating “it does not intend to pursue the contemplated public offering of the securities covered by the registration statement at this time,” in a statement.

Cencosud purchased a 67% stake in the business for $676 million in May from Apollo Global Management. Apollo had previously taken the company private after its initial public offering in 2016.

Motif Foodworks Announces Layoffs As Part of Restructuring Plan

Boston-based food tech company Motif Foodworks announced it has laid off an undisclosed portion of its staff as it prepares to restructure the company to focus on maximizing its ROI. The announcement comes after a banner year for the Ginkgo Bioworks spinoff which secured GRAS approval for its proprietary plant-based meat technology last fall. Earlier this year, the company was pulled into an intellectual property dispute with Impossible Foods over the use of heme ingredients. That dispute is still ongoing.